Technology-empowered Digital Trade in Asia Pacific

Technology-empowered
Digital Trade in Asia Pacific
December ,2021 1
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific

Contents

Summary of the trends 4

I. Ecology of digital trade in the Asia Pacific region emerges 6
1.1 Global trade enters the era of intelligence 6
1.2 The Asia Pacific region seizes opportunities to develop digital trade 7
1.2.1 Enterprises speed up the deployment of online foreign trade 7
1.2.2 Digitalized habits of consumers are intensified 7
1.2.3 Digital infrastructure is constantly improved 9
1.2.4 The RCEP promotes regional cooperation 12
1.3 SMEs are the main driver for the transformation of digital trade 15
1.3.1 Asia Pacific mMNEs are rising rapidly 15
1.3.2 SMEs and the overall digital trade complement and reinforce each other 15
1.4 Green and sustainable development is a key theme of digital trade 16
1.4.1 Green and sustainable development is an important goal of Asia Pacific economies 16
1.4.2 Consumption of green products is increasingly booming 16
1.4.3 Green development of e-commerce enterprises is constantly valued 16
II. Comparison of the development of digital trade markets in the Asia Pacific region 17
2.1 Evaluation system for the development of digital trade in the Asia Pacific region 17
2.2 Development of digital trade in the Asia Pacific region and market grouping 17
III. Analysis of key countries in the Asia Pacific market 20
3.1 Singapore, as the international finance and maritime center, connects the Southeast Asia 20
3.2 China’s platform-based development drives the cross-border trade 21
3.3 South Korea strategically turbocharges its cross-border e-commerce 22
3.4 Japan’s strong logistics technologies underpin the cross-border trade 23
3.5 Malaysia’s continuous digitalization penetration drives the growth of cross-border trade 24
3.6 Indonesia’s demographic dividend keeps unleashing market potential 25
3.7 E-payment rate of the Philippines constrains the online trade 26
IV. Ten findings of the cross-border e-commerce dynamics in the Asia Pacific region 28
4.1 Small businesses account for more than 85% of cross-border e-commerce 28
4.2 “Cross-border home-bound economy” comes into prominence with 3C electronic products emerging as an export mainstay 28
4.3 Mature markets favor Europe and America, while developing markets focus on Southeast Asia 29
4.4 70% of enterprises hope to establish independent websites 32
4.5 Payment and sales are the most digitized links 33
4.6 Instant receipt of funds makes cross-border collection more efficient 34
4.7 High logistics cost is the largest challenge to cross-border e-commerce 35
4.8 “Genuine goods guarantee” is vital to the sustainable development of supply chains of cross-border e-commerce 36
4.9 Customs clearance process simplification and tariff reduction are the main expectations after the RCEP takes effect 36
4.10 Green development is turning from goal into action 37

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Technology-empowered Digital Trade in Asia Pacific
Summary of the trends
1. The next three years will remain a golden period for the development of digital
trade, especially in the Asia Pacific region
• Global digitalization has been enhanced, the pandemic has accelerated the digitalization
process of consumers and businesses, and it is difficult to reverse the habit of online
consumption once it is formed. Meanwhile, ASEAN has become China’s largest trade
partner thanks to the Belt and Road Initiative (BRI). In Southeast Asia, cross-border
e-commerce platforms such as Lazada have emerged. They rush at China to recruit
Chinese businesses on a large scale, hoping to import more Chinese goods to meet the
needs of local consumers.
• Digital technologies enable global sellers to participate in global trade without any
barriers to entry. The continuous improvement of digital infrastructure will effectively
help remove two major constraints affecting cross-border trade: logistics and payments.
Blockchain technology is also creating a new space of imagination for digital trade.
• The Regional Comprehensive Economic Partnership (RCEP) will promote regional
cooperation, and facilitate regional digital trade in five aspects: removing tariff barriers,
establishing flexible rules of origin, promoting e-commerce, enhancing trade facilitation,
and focusing on small and medium-sized enterprises (SMEs) and technical cooperation.
2. Cross-border e-commerce and digitalization are shaping the relative pattern of
digital trade development in the Asia Pacific region
• The development levels of digital trade in major Asian economies are analyzed and
compared from two dimensions, namely cross-border e-commerce and digitalization.
Asian markets can be classified under three categories: mature markets, including
China, South Korea, Singapore and Japan; developing markets, including Thailand,
Malaysia, Indonesia, Vietnam and the Philippines; and early-stage markets, including
Myanmar, Cambodia, Laos and Brunei.
3. Analysis of key countries in the Asia Pacific market
• Singapore: Highly internationalized financial and maritime center renders Singapore
an important market in Asia, even in the world. The Singaporean government actively
promotes global digital trade, and the country has become a central hub for the
headquarters of many cross-border e-commerce platforms in Southeast Asia.
• China: Developed digitalization lays a solid foundation for China’s e-commerce trade,
which has entered a mature stage with huge development potential.
• South Korea: South Korea is world-leading in terms of infrastructure digitization, and the
country promotes the development of cross-border e-commerce from the perspective
of its national strategy.
• Japan: Strong logistics technologies that underpin the cross-border trade and
infrastructure of digital economy have been perfected. However, cross-border
e-commerce in Japan is still not open enough due to obstacles in the e-payment
industry caused by population aging.
• Malaysia: The growth rate of the e-commerce market ranks first among RCEP member
states. However, limited by factors such as cross-border logistics infrastructure, cross-
border e-commerce in Malaysia has not been developed significantly.
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Technology-empowered Digital Trade in Asia Pacific
• Indonesia: Demographic dividend, internet penetration rate and consumer habits create
great potential for the development of e-commerce and cross-border e-commerce in
Indonesia.
• The Philippines: E-commerce has huge growth potential, but is constrained by a low
internet penetration rate and an undeveloped e-payment industry.
4. Asia Pacific micro-multinationals are springing up rapidly
• With the help of digital platforms, entrepreneurs and small businesses in the Asia Pacific
region have become micro-multinational enterprises (mMNEs) as they are engaged in
cross-border e-commerce across different markets. They provide diversified “locally-
made products” and light customization services for global buyers.
• Asia Pacific businesses have a higher degree of satisfaction with the digitalization of
payments and sales among all the links of cross-border e-commerce. They make full use
of platforms and tools to forge ahead. In terms of payments, they choose reliable cross-
border payment platforms to improve the timeliness of capital flows and realize one-
stop purchasing, order placement and payment collection. In terms of sales tools, they
can efficiently find the correct direction for development by relying on various tools for
selecting goods and uploading goods information with the help of big data analysis.
• RCEP clearly supports the cross-border operation of e-commerce, so new formats
of cross-border e-commerce such as independent websites are guaranteed by
international rules, which is of great importance. Compared with third-party platforms,
cross-border e-commerce with independent websites has the advantages of precision
and flexibility. 70% of the surveyed enterprises plan to set up independent websites,
which is already in place in 33.4% of the surveyed enterprises. Independent websites
have become a key channel for enterprises to break the business ceiling or expand into
new markets, as it attracts the attention of increasing export sellers.
5. Overseas warehouse emerges in response to higher requirements for the
service level of cross-border logistics
• In the context of cross-border e-commerce trade, overseas warehouses mean that
domestic enterprises send goods to the target country through bulk transportation,
set up warehouses and store goods in that country, and then immediately respond
to local sales orders and directly carry out sorting, packaging and distribution in local
warehouses in a timely manner.
• The essence of overseas warehouses is to localize cross-border trade, improve
consumer shopping experience, and thus boost the competitiveness of cross-border
sellers in the export destination market. Its prominent advantages include reducing
logistics cost, accelerating logistics timeliness, increasing product exposure, and
enhancing shopping experience.
6. Competing cross-border payment institutions help cross-border e-commerce
forge ahead
• The rapid development of cross-border e-commerce is accompanied by highly intense
competition in the third-party cross-border payments market. Cross-border payment
platforms lower the cost and threshold of financial services and increase the utilization
frequency of users relying on technical means. Furthermore, they have become an
indispensable payment channel with the advantages of speed, convenience and high
security. Specifically, WorldFirst occupies a share of over 40% in China, Japan and South
Korea.
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges

I. Ecology of digital trade in the Asia Pacific

1.2 The Asia Pacific region seizes opportunities to develop digital trade
COVID-19, the development of digital technologies and enhanced regional cooperation are accelerating the formation of digital

region emerges
trade in the Asia Pacific region. Digital trade in this region is presented with brand-new development opportunities as the supply
and consumption sides accelerate online deployment, with digital infrastructure like platforms and payments under continuous
improvement, and as regional policies promote trade facilitation and strengthen technological cooperation.

1.1 Global trade enters an era of intelligence

Figure: Development Opportu-
Under the influence of technological advancements and in-depth international cooperation, among other factors, global trade has Tech-driven sustainable
nities for Digital Trade in the
gone through four development stages: growth
Asia Pacific Region
Production
Figure: Four Development Stages of the Global Trade
Further in-depth and comprehen-
sive combination of more advanced Transactions Logistics
digital technologies and trade Cross-border
e-commerce
Accelerated development of 4.0 Era of intelligence
driven by SMEs
digital technologies represented
Deepening of economic glo- by information communication • Data factors plays a promi-
nent role. Digital infrastruc- Payments Sales
balization and further reduc- 3.0 Era of digitalization
ture, such as 5G, facilitates
tions in transportation and
the Internet of Everything
coordination costs
2.0 Era of global value • Emergence of “digital trade” (IoE) The trends spurring on digital trade in the Asia Pacific
(digitalization of trade meth- • Big data, combined with artifi-
chains
ods and objects) cial intelligence, plays a role
• Division of production of intelligent decision-making
1.0 Traditional era
processes among various
• Division of production and countries
consumption among vari- • Involves the trade of inter- Businesses accelerating the de- Adoption of new digital hab- Continued improvements to RCEP promotes greater re-
ployment of online foreign trade its by consumers digital infrastructure gional cooperation
ous countries mediate goods and services
• Involves the trade of final Source: Deloitte
products
Source: OECD and Deloitte
1.2.1 Businesses accelerating the deployment to e-commerce platforms, Figure: Survey of Digital Transfor-
deployment of online foreign trade striving to meet the needs of pandemic mation of Foreign Trade SMEs
(1) Traditional era:Initially, (3) Era of digitalization: In recent years, with the accelerated development of digital Affected by the COVID-19, businesses prevention and the control and main-
global trade mainly took the technologies such as information communication, the popularity and sophistication of around the world are facing challenges tenance of economic development.
form of cross-border produc- digitalized trade models and objects has grown and “digital trade” is surging forward. Dig- such as restricted offline venues, Countries lagging behind in e-com-
tion and consumption based
on the comparative advantag-
ital trade refers to the domestic business and international trade activities during which
digital technology plays a major role in order placement or delivery. It mainly includes:
tight cash flow, and a steep decline
of orders, with some even suffering
merce rely on regional e-commerce
platforms to participate in cross-border 84%
es of various countries, and it 1) digitalized trade models represented by cross-border e-commerce, and 2) digitalized closures or bankruptcy. The offline digital trade at a lower cost. Enterprises Increase in investment
primarily involved the trade of trade objects represented by digital products (such as audio and video, software, etc.) in online trade after
deployment of enterprises is blocked in these countries use the operation
COVID-19
final products. and digital services (such as information technology services, and online healthcare). objectively, while global public goods levels of advanced e-commerce coun-
Data source:
are in short supply. These external tries for reference to promote the ebrunresearch
conditions have prompted enterprises application of digital technologies. With
rapid development in recent years.
in the Asia Pacific region to accelerate the advantage of low barriers to entry,
The COVID-19 situation in 2020 also
the deployment of online foreign trade. vast markets and supportive policies,
(2) Era of global value chains: With the (4) Era of intelligence: As digital technologies are upgraded, and the According to a survey of more than 100 cross-border e-commerce markets in
accelerated the formation of digitalized
deepening of economic globalization and combination of digital technology and trade evolves to a deeper and behavioral habits of consumers, and
Chinese export-oriented companies, various economies have ushered in
the further reduction of transportation and more comprehensive level, digital trade has entered the era of intelli- online consumers have seen an accel-
84% of the enterprises continued to opportunities for acceleration, and the
coordination costs, the pursuit of produc- gence. Data factors play a prominent part in this period. Important digital erated expansion in both quantity scale
conduct foreign trade online after the supply side of digital trade in the Asia
tion cost minimization drove enterprises infrastructure, including 5G, will help build data distribution platforms and utilization market. Social distancing
outbreak of pandemic1. Pacific region is prospering.
to distribute production links over multiple and new network architectures, and facilitate the Internet of Everything Economies with mature e-commerce during the pandemic has added a large
countries, signifying that trade had entered (IoE). In the meantime, the vast accumulation of big data, coupled with markets in the Asia Pacific region number of customers to apps covering
a period of global value chains. Global trade artificial intelligence, will play a role of intelligent decision-making. leverage the first-mover advantage in 1.2.2 Adoption of new digital habits e-commerce, social media and life ser-
in this period mainly involved the transac- On the whole, today’s global trade is aggressively shifting from the stage cross-border e-commerce, taking the by consumers vices, and a great deal of consumption
tion of intermediate products and services. of digitalization to the stage of intelligence with “digital trade” as the latest lead in accelerating the deployment of Owing to improving information com- based on digital channels has led to the
development form. As cross-border e-commerce has developed rapidly cross-border e-commerce. Enterprises munication conditions, the popularity explosive growth of the “homebound
in recent years, it has become a breakthrough in the development of dig- with online and offline omni-channel of smartphones and the enhancement economy” during the pandemic.
ital trade. This report mainly focuses on cross-border e-commerce and operations tend to shift their business of logistics, the e-commerce market in
its related services. the Asia Pacific region has witnessed
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Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges

Figure: COVID-19 Catalyzes Digital Behavior among Consumers 1.2.3 Continued improvements to of commerce will not change, namely buyers and sellers directly, reducing
digital infrastructure meeting consumer demand and im- the cost of searching and coordinating.
Since the outbreak of COVID-19… (1) The Asia Pacific region has become proving the efficiency of supply chains. Such platforms, with greater room for
I have tended to shop one of the major players in the global In terms of meeting consumer demand, growth, have created seamless global
online more than 25% 27% 25% 12% 11% digital platform digital platforms and their technology markets in e-commerce, payments,
before
Countries and regions in Asia are im- tools for trade will provide new growth travel, study and labor services. With
I have spent a lot of proving digital infrastructure (such as opportunities for Asian SMEs and drive data, search engines and algorithms,
time watching digital 23% 36% 22% 11% 8% AI, big data and cloud and blockchain) the sustainable post-pandemic eco- these digital platforms can reduce the
entertainment content
and enhancing connectivity and popu- nomic recovery in the Asia Pacific re- cost of acquiring and applying infor-
I have spent more time larity through policies and reforms so gion. As trade is increasingly dependent mation, bypass intermediaries, reduce
browsing online 15% 36% 26% 13% 10% as to reap the benefits of the digitalized on digital platforms and tools, tradition- trade barriers, and use idle assets
economy. Riding the wave of the digital al forms of foreign trade can no longer to lower production and distribution
Completely agree Agree Unsure Disagree Completely disagree
economy, cross-border digital trade meet the needs of cross-border trade, costs2. With the rise of digital platforms,
Data source: United Nations Conference on Trade and Development has ushered in significant development and cross-border e-commerce plat- new business models emerge one after
Note: This survey, conducted in June 2020, covers nine countries, including Brazil, China, Germany, Italy, Russia, South Korea, South Africa, Switzerland and Turkey.
opportunities. However, no matter forms also play a role in cross-border another, bringing huge economic op-
how technology iterates, the essence digital trade. Digital platforms connect portunities.

Rapid spread of digital payments: Digital payments, a tool for the digital consumption industry, have spread rapidly
during the pandemic based on the expansion of online consumption and the convenience it provides. Shopping online, Figure: Digital Platforms Facilitate Trade Integration
paying for utilities and ordering take-out have all become the application scenarios of digital payments. In addition
Present Future
to payments, digital payment platforms also provide other functions such as entertainment and life services through
constant innovation. As of the first half of 2021, Alipay Wallet had 850 million active users, one fifth more than the 700 Digitalization of global trade
million at the beginning of 2020. In India and Indonesia, nearly 50 million users got an update on real-time information Government consignees
agencies
and pandemic dynamics via e-wallet. Such shift has accumulated a user base for countries in the exploratory stage of
digital payments, thus providing good conditions for the development of digital trade.

Consumption via cross-border e-commerce is booming: As the pandemic prevention and control enters the
Exporters Government Government Freight Exporters Land Railway Freight consignees
normalization stage, consumers pay more attention to health and safety, and tend to meet their strong consumer agencies agencies forwarders transportation transportation forwarders
demand through e-commerce channels. The wide variety of options, products with high performance-price ratio and by truck
the simple shopping processes of e-commerce have intensified consumers’ online shopping preference. In addition, as
the prospects for the liberalization of cross-border travel do not look optimistic in the short term, global shopping of
higher quality is expected to become a new consumption lifestyle model.
Destination Government Government Means of
Destination Government Government Means of agencies agencies conveyance
Digital entertainment ushers in growth: The pandemic has boosted people’s demand for online entertainment, agencies agencies conveyance
Data source: IBM
such as binge-watching, online gaming and social media. The penetration rate of online entertainment and social
scenarios has increased and the two are closely integrated. As the consumers’ habit of payments for digital products
In 2019, digital platform business-to- companies, third-party logistics (3PLs), Sea transportation will benefit from
is gradually established and consumption preferences become mature and diverse, demand for digital goods will be
consumer revenues reached US$3.8 overland transportation, consignors pre-built connections with custom-
more diversified. The cross-border trade of digital goods is expected to usher in growth opportunities.
trillion, equivalent to 4.4% of global and other players, and impact all links ers and ports/terminals around the
GDP. Asia accounted for about 48% of the supply chain in global digital world and real-time access to end-to-
Life service scenarios are unlocked: Due to the pandemic, restaurants, fruit and vegetable supermarkets, leisure
(US$1.8 trillion; equivalent to 6% of trade. end supply chain activities.
and entertainment and other businesses that originally focused on offline consumption and operation have turned to
regional GDP), the US accounted for • Ports and wharfs: Digital platforms • Customs and governments: Digital
online sales channels, and takeaway delivery services have seen rapid development. The traffic obtainment, radiation of
22% (US$836.7 billion; 3.9%), and the provide information on the disposal platforms provide information on im-
digital platforms and the creation of consumption scenarios will enable more consumers to complete the consumption
euro area 12% (US$445.3 billion; 3.3%). of cargos within port/wharf bound- port and export customs clearance
behavior of life service products, and online consumption of life services will become a considerable are of growth.
Asia will continue its rise as a major aries. Ports and wharfs will benefit of goods entering and leaving the
After the pandemic ends, cross-border population flows will gradually return to normal, and offline cross-border retail
player in the global digital platform from pre-established connections country. Customs and governments
and services are expected to bounce back. In terms of the payment tools, efficient and convenient mobile payments
market as increasingly wider access to with shipping companies and other will benefit from better-informed
will become the mainstream as an important force to boost the life of digital consumption. In the post-pandemic
digital technologies brings more users actors, end-to-end visibility of ship- risk assessment, better information
era, consumer confidence will gradually rise again along with the economic recovery, and it will be difficult to reverse
and generates higher revenue growth2. ping corridors, and real-time access sharing, less manual paperwork, and
the digitalized habits that have already been established. These factors will bring opportunities to the booming
In terms of improving the efficiency of to more information, thus enriching easier connection to national sin-
development of digital consumption-related fields.
supply chains, digital platforms aim to port collaboration and improving gle-window platforms.
connect and provide benefits to the wharf planning. • Forward freight: Digital platforms
supply chain ecosystem, form a global • Sea transportation: Digital plat- provide transportation plans, over-
shipping corridor network connecting forms provide information on the land transportation events, handover
ports and wharfs, customs, shipping disposal of cargo transported by sea. information of multimodal transpor-
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Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges

tation and document fillings. Forward platforms provide information on the for shipping information events and
freight will benefit from pre-built eco- disposal of the cargos transported by paperless trading capabilities. Con- • Cost reduction: In general, cross-border payments incur high cost. The banks do not have direct contact
system connectivity, improved tools trucks, railway and barge. Asset plan- signers will benefit from streamlined with each other over a long distance, so they often need to turn to intermediary banks to realize indirect
for customs broker functions, and ning and utilization can be improved, and improved supply chains so as to payments. The integrated blockchain removes the need for intermediaries, which dramatically lowers the
real-time access to end-to-end sup- and real-time access to end-to-end increase predictability, notify issues cost of initiating cross-border transactions. Blockchain can help businesses reduce transaction costs by 40-
ply chain data so as to improve the supply chain events can be achieved in advance, validate the entire trans- 80%, compared to a reduction of about 8% by traditional cross-border payments.
effectiveness of tracking and relevant to carry out delivery. parency of costs and surcharges, and
tools. • Consigners: Digital platforms take realize less safety stock.
• Multimodal transportation: Digital part in the solution as a consumer
• Authenticity of transactions: The underlying distributed ledger technology and hash pointer technology
of blockchain grant the data stored in the blockchain immutability and traceability. The whole transaction
(2) Cross-border payments have initiated value-based services
process is subject to the blockchain, delivering more authentic orders and more reliable transactions.
Cross-border payments have gone through three development stages from local to global. From basic payment channel
services to online trading platform for cross-border trade, it is now stepping into the stage of commercial operating systems
featuring one-stop comprehensive solutions for cross-border trade.
• Real-time transaction information: It has been proved that transactions can be completed within two to
Stage 1.0 This stage is mainly dominated by foreign cross-border payment enterprises, which charge high payment service five working days if cross-border payments are made through a third party. It is obvious that there may be
fees and the absence of other options for sellers. significant time differences between two currencies. Capable of realizing second-level transaction speed, the
Stage 2.0 With the rise of domestic cross-border payment enterprises, transaction rates are gradually lowered, and the blockchain technology has reduced the confirmation period to 6-141 minutes up to now.
establishment of payment licenses gradually sets industry standards.

Stage 3.0 Domestic cross-border payments enter an era when many enterprises contend. The major means of competition
• Security: Cross-border transactions via blockchain technology are protected by cryptography. Network par-
no longer lies in the transaction rate, which is replaced by differentiated value-added services and one-stop
ticipants have their own private key assigned to the event, which serves as the digital signature. The signa-
solutions for cross-border trade. The businesses that can really enhance industry efficiency and better meet the
ture will be invalid if the record is changed. As blockchain has no single point of failure, it cannot be altered
integrated demand of cross-border sellers can seize the initiative in future competition.
in a single computer.

Figure: Development Course of Cross-border Payment Platforms Online economy develops

from local to global
• Rich data sources: Metadata are transmitted from end to end, and pre-transaction information exchange
is authorized in advance.
3.0 Comprehensive solutions for
cross-border trade
Domestic cross-border payment
• Irreversibility: Each transaction has verifiable records.
enters an era where many enterprises
1.0 Basic payment channel contend and more value-based
services Popularity of smartphones further
services on offer
boosts the online economy
The cross-border payment market • Rates are further lowered to 0.5- • Close links with finance: Inclusion of the banks and other financial institutions into the ecology of block-
is dominated by foreign payment 0.7% chain enables banking institutions to conduct validation with transparent and traceable data in the block-
2.0 Online payment platforms
enterprises • Enterprises focus on brand chain. Such practices strengthen control over cross-border trade risks, and meets the bank's requirements
Rise in domestic cross-border payment
• High payment service fees: 2-3% building and provide differentiated around risk control. At the same time, banks can also eliminate the phenomenon of “multiple sums of fi-
enterprises
• Enterprises dominate the market, value-added services nancing for one transaction” through financing data sharing, thereby meeting the huge demand of SMEs for
• Rates in the industry are lowered to
and sellers have no choice. • Entering the value chain of sellers cross-border trade financing.
1%
• Payment licenses set the barrier to makes cross-border trade more
Internet economy rises
entry in the industry efficient and simpler
• Fund security becomes users’pain One-stop comprehensive solution is the core means of competition to build digital trade. The new track of cross-border
point Source: Deloitte payments for digital trade integrates many new value-added services, such as translation, customs clearance, currency exchange,
duty refunds, logistics, merchant reviews, financing and other supply chain services for international trade. Increasing innovations
The application of blockchain + payments breaks through the limitations around traditional cross-border payment and advanced transformations place participants on an integrated platform where they may get everything they want. One-stop
models. The current SWIFT system of traditional banks binds multi-party credit with international standards. Due to the existence comprehensive solutions will drive the growth of the global cross-border payment trade market.
of centralized architecture and agency mechanism, the current cross-border payment and settlement methods face similar
problems: long duration, high cost, and too many intermediate links, which make it difficult to control risks. Blockchain-based
cross-border payments solve the problems of traditional payment methods as follows:

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Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges I. Ecology of digital trade in the Asia Pacific region emerges

Figure: One-stop Service Ecology of Digital Trade (1) Removal of tariff barriers used in the production of the products the formulation of digital trade rules
After RCEP takes effect, more than 90% as the originating materials of the party worldwide lags behind development
of trade in goods in the region will fi- where the production takes place, and practices. At the multilateral level, the
Payer Payee nally enjoy zero-tariff treatment, mainly that the product’s RVC can be accumu- WTO has not introduced special rules
SWFIT including the immediate elimination of lated in the region of the 15 member on the digital trade, and relevant rules
Local clearing Intermediary Intermediary Local clearing
most tariffs with the remainder being states. Exporters can enjoy preferen- take the form of scattered content in
Payer's bank Payee's bank eliminated within 10 years. This makes tial policies within the region as they agreement texts and annexes under
system bank bank system
it possible for the RCEP FTA to fulfill its will more easily meet the RVC40 ratio the frameworks of the WTO, such as
commitment of liberalizing all trade in requirement or other material trans- the General Agreement on Trade in
goods in a relatively short period3. It is formation requirements through the Services (GATS), the Information Tech-
foreseeable that the removal of tariff cumulation rule. The lowered regional nology Agreement (ITA), the Agreement
Payer Payee barriers will significantly reduce trade preferential barriers allow multinational on Trade-Related Aspects of Intellectual
costs and product prices within the re- companies to be more flexible in the Property Rights (TRIP) and the Decla-
Payment platform gion, and bring about a huge trade cre- decision-making of industrial layout, ration on Global Electronic Commerce.
Local clearing Local clearing
Payer's bank of cross-border e-commerce Payee's bank ation effect. According to estimates by thereby enabling the existing system Due to the lack of foreseeability in the
system system
United Nations Conference on Trade around the division of labor on the in- development and reform of digital
and Development, “RCEP is expected dustrial chain to be more refined. The technology and the constrained effi-
to increase member states’ exports by reduction of production costs brought ciency of Doha Round negotiations, the
more than 10% by 2025”4. Cross-bor- about by flexible rules of origin will not above multilateral rules for digital trade
der e-commerce in most RCEP member only facilitate trade within the RCEP re- are facing new challenges in terms of
states is still in a phase of rapid growth. gion, but also promote deeper integra- text design and operation5.
The commitment to a “gradual shift to tion of regional supply chains and value
zero tariff” is expected to enhance the chains. It is the first time that the RCEP
International International Currency Merchants Duty refund Cross-border competitiveness of export commodities Change in tariff classification has included a dedicated chapter
collection of funds acquiring service exchange review management logistics by reducing the cost of taxes and fees, (CTC) refers to that after one party on e-commerce, which is the first
• Global payment • International bank • Interbank rate • Access to identity • Signing joint export • Bonded warehouse thereby bringing benefits to cross-bor- processes the raw materials of other comprehensive and high-level out-
network card acquiring • Locking products authentication sys- agreement with • Matching cross-bor-
• Receipt of pay- • Local wallet ac- to avoid risks tem duty refund service der logistics routes
der e-commerce within the RCEP re- parties, goods and raw materials are come of plurilateral e-commerce
ment on the same quiring • Trading at any • Access to compre- platform based on big data gion. categorized with different codes in rules established in the Asia Pacific
day* • Optimization of time (7*24) hensive enquiry sys- • Rapid arrival of duty the HS classification, including Change region. There are mainly three high-
• Full-amount pay- cross-border ac- tem for enterprises refund
ment quiring • OFAC/World Check
(2) Establishing flexible rules of origin in Chapter (2 Digits), Change in Tar- lights as below:
• Bulk payment • Value-added ser- Source: Deloitte Qualification around the origin of iff Heading (4 Digits) and Change in
vices goods is the basis for preferential RCEP Sub-headings (6 Digits). The CTC ap- Firstly, provisions related to paperless
treatment, which ensures relatively free plies only to non-originating materials, trading, ensuring the validity of elec-
and flexible arrangements for the rules and all non-originating materials are tronic authentication and signature,
1.2.4 RCEP promotes greater reform was formally implemented. The Figure: RCEP Facilitates Digital of origin. Enterprises can choose be- required to undergo the CTC. and temporary exemption from custom
regional cooperation reform mainly focuses on removing Trade in Five Aspects tween regional value content or change duties, will be conducive to creating a
On November 15 2020, ten ASEAN the EU€22 VAT de minimis, unifying in tariff classification, and all member (3) Promoting e-commerce more convenient online business envi-
member states, as well as China, Ja- the registration threshold for the VAT states are identified as a whole, so that At present, no sound or mature ronment. For digital trade, the interna-
Removal
pan, South Korea, Australia and New payment of long-distance sales, ex- of tariff the place of origin value content of set of rules for global e-commerce tional mutual authentication of digital
Zealand, signed the Regional Compre- panding the application scope of “one- barriers
goods produced in different countries have been established. On the one identity, a basic condition for the estab-
hensive Economic Partnership (RCEP), stop” compliance mechanisms, and can be accumulated. hand, with the increasingly obvious lishment of digital factor markets, pro-
marking the official launch of a free clarifying the VAT payment obligations Emphasis on Establishing
Regional Value Content (RVC) refers strategic competition in digital trade, motes the cross-border flow of digital
SMEs and flexible
trade area (FTA) with the largest pop- of e-commerce platforms. Affected by to that in case a party produces goods many economies are pursuing differ- technology. Meanwhile, thanks to the
technological Digital rules of
ulation, economic and trade scale and such reform, trade activities in EU will cooperation trade origin with non-originating materials, the entiated digital trade policies, while above provisions, the transaction links
development potential in the world. be weakened and those in the Asia goods can only be qualified as originat- developing countries are in a defensive can be further developed online. It is
According to the agreement text, the Pacific region will be further boosted in ing when they meet the requirement position in digital trade policies and expected that more scenarios like on-
chapters on “Trade in Goods”, “Rules the future. that the RVC is no less than 40%. rules for cross-border data flow. For line displays, online negotiations, elec-
Enhancing trade Promoting
of Origin”, “Customs Procedures and facilitation ecommercen Closely linked to the RVC is the "cu- example, India, Indonesia and South Af- tronic payments and electronic signing
Trade Facilitation”, “Electronic Com- mulation rule", which is also the most rica are opposed to global e-commerce will emerge, which will further broaden
merce”, “Small- and Medium-sized En- unique aspect around the rules of negotiations and refuse to sign the the channels of foreign trade and help
terprises” and “Economic and Technical origin in the RCEP. The so-called cumu- Osaka Declaration on the Digital Econ- companies secure more foreign trade
Cooperation” indicate the direction for Source: Deloitte
lation rule means that RCEP treats the omy, and India also advocates for local- orders.
promoting regional digital trade. originating materials of other parties izing data storage. On the other hand,
However, on July 1 2021, the EU VAT
12 13
Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges
Secondly, provisions on online con-
sumer protection, online personal
information protection, regulation of
unsolicited commercial electronic mes-
sages and cyber security protection are
conducive to avoiding cyber hazards re-
lated to cross-border e-commerce. By
introducing laws, RCEP is expected to
achieve the coordinated protection of
consumers’ rights and interests across
borders, while also creating a favorable
environment for e-commerce. Com-
pared with domestic e-commerce, how
to protect online consumers’ rights and
interests is a particular pain point right
now for the operation of cross-border
e-commerce. The ruling power was for-
merly in the hands of overseas courts
and arbitrators. Different interpreta-
tions of the provisions not only made
it more difficult for consumers to safe-
guard their rights, but also affected the
operational efficiency of cross-border
e-commerce to a certain extent. For
this reason, the provisions on consum-
ers’ rights and interests in the chapter
of Electronic Commerce mainly aim
to protect the security of consumers’
information, make relief and recourse
specific and transparent, and supervise
cross-border e-commerce businesses.
Thirdly, RCEP clearly supports the
cross-border e-commerce operations,
and so new formats of cross-border
e-commerce such as independent
websites are guaranteed by interna-
tional rules. Specifically, in the case of
“the realization of a legitimate public
policy objective” and “the protection
of essential security interests” without
conflict, no party shall claim the right
to monitor the computing facilities of a
party involved as a condition for con-
ducting business, nor prevent a party
involved from transferring information
across borders by electronic means to
conduct business.
The aforementioned provisions will pro-
vide institutional guarantee for mem-
ber states to strengthen e-commerce
cooperation, facilitate the creation of
a favorable environment for the devel-
opment of e-commerce, and enhance
14
mutual trust of policies, mutual recog-
nition of regulations and mutual com-
munication among enterprises in the
field of e-commerce, thereby greatly
advancing the development of e-com-
merce in the region. In the future, the
integration of advantages of cross-bor-
der e-commerce and traditional manu-
facturing in the RCEP FTA may become
the key for enterprises to reduce costs
and increase efficiency, and the mutual
promotion between online and offline
operations will support the long-term
coordinated development of enterpris-
es.
(4) Enhancing trade facilitation
Compared with the Agreement on
Trade Facilitation of the WTO and
the relevant rules in the FTAs already
signed by China, RCEP rules on cus-
toms procedures and trade facilitation
cover more comprehensive content
with a higher degree of facilitation.
These rules will enable the use of digi-
tal technology to reduce customs clear-
ance time and improve the efficiency
of cross-border trade. RCEP simplifies
customs clearance procedures with
the adoption of a range of efficient
administration measures to facilitate
customs procedures, such as advance
rulings, pre-arrival processing and the
use of information technology and the
release of goods by express and per-
ishable goods, among others, within
six hours after arrival, where possible.
Such practices boost the development
of new types of cross-border logistics
such as express delivery, and promotes
rapid customs clearance and increased
trade in fruits, vegetables, meat, eggs,
dairy and other fresh products. These
measures will drastically enhance the
facilitation of trade in goods within the
region, provide efficient and convenient
customs clearance services to enter-
prises of member countries, reduce
trade costs, shorten logistics time and
further promote the formation of a re-
gional integrated market.
(5) Emphasis on SMEs and technical
cooperation
Levels of development among RCEP
members vary significantly. In order to
realize balanced development, RCEP
specifically includes two chapters,
Small- and Medium-sized Enterprises
and Economic and Technical Coop-
eration. The two chapters enable the
member states to strengthen support
for SMEs and increase their levels of in-
vestment, while also building economic
and technical cooperation through the
FTA platform, so that SMEs and devel-
oping economies can better capitalize
of RCEP's advantages.
The chapter of SMEs aims to build a
broader exchange platform for coop-
eration among SMEs. By emphasizing
the promotion of information sharing,
SMEs are encouraged to take advan-
tage of the FTA and economic coopera-
tion projects under the Agreement in a
more active manner, so as to integrate
into the regional value stream and sup-
ply chain. In addition, the agreement
specifically places emphasis on promot-
ing the use of e-commerce by SMEs.
SMEs, with great potential in economic
growth, employment and innovation,
are major drivers of digital trade.
The chapter on Economic and Tech-
nical Cooperation aims to narrow
development gaps among the parties
and achieve common development.
Economic and technical cooperation
gives more importance to capacity
building and technical assistance that
focus on trade in goods and services,
investment, intellectual property,
e-commerce, competition and SMEs.
The demands of the least developed
countries (such as Cambodia, Laos
and Myanmar) will be first considered,
which is conducive to the effective flow
and utilization of digital technology
within the region.
According to Deloitte’s survey of nine
Asia Pacific countries, cross-border
e-commerce enterprises in this region
are full of expectations after RCEP takes
effect, especially in terms of simplifying
customs clearance procedures and
improving efficiency. They also expect
the reduction of tariff barriers and the
lowering of barriers to entry for local
businesses (refer to 4.9 of this report
for details).
1.3 SMEs are the main drivers
behind the transformation of
digital trade
1.3.1 Asia Pacific mMNEs are rising
rapidly
In traditional international trade, com-
modities, technologies, funds and other
elements mainly flow among large busi-
nesses. However, digital technologies
have resulted in a constant reduction
of global trade barriers and barriers on
the international division of labor, and
global trade has presented the features
of fragmentation and high frequency.
Therefore, SMEs can extensively partic-
ipate in global trade. With the help of
cross-border e-commerce platforms,
they can not only sell their products
to broader markets, but also make
cross-border purchases. With the help
of digital platforms, entrepreneurs and
small businesses have become mMNEs
as they are engaged in cross-border
e-commerce across global markets.
They provide diversified “locally-made
products” and light customization
services for global buyers. Asia Pacific
mMNEs are rising rapidly.
These businesses are typical small and
micro enterprises, and many of them
are even start-ups with fewer than 100
employees. Compared to convention-
al foreign trade businesses, they are
more adept at using digital platforms.
Even though they are new players,
they can rapidly complete the compli-
cated deals that only large businesses
could handle in the past, including
products selection, purchasing, sales,
logistics, customs clearance, collection
of payments, settlement of exchange
deals and duty refunds. Meanwhile,
they have operated an average of 3.56
overseas outlets, which means most
of the companies serve three or even
more overseas markets. This group
Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges
of businesses are mainly composed
of small retailers, small wholesalers,
and self-use purchasers. The Deloitte
survey has also demonstrated the
aforesaid conclusions that Asia Pacific
e-commerce markets mainly consist of
Figure: Portrait of mMNEs
Background:
A large number of SMEs em-
brace digitalization and the bar-
riers to access to cross-border
trade are increasingly lower
Portrait of small
and medium-
sized cross-border
e-commerce
businesses
Scale:
Small scale, typically with
fewer than 100 employees
1.3.2 SMEs and digital trade
complement and reinforce each
other
The boom in digital trade would
not be possible without the active
exploration of SMEs on e-commerce
platforms by virtue of their flexibil-
ity. The development decisions made
by large businesses tend to have a wide
range of implications and involve com-
plex interests, while SMEs can quickly
shift their business directions. Thanks
to their flexible coping capacity, it is
easy for SMEs to transform production
lines and grasp the demand changes of
short-term markets. In addition, SMEs
are more motivated to provide prod-
ucts and services in vertical market
small businesses with fewer than 100
employees (accounting for over 85%),
and more than half of the businesses
have an annual revenue of less than
US$1 million (refer to 4.1 of this report
for details).
Type:
Small retailers, small whole-
salers, self-use purchasers
Covered markets:
Enterprises operate an aver-
age of 3.56 outlet
Date source: CBNData, Deloitte
segments in view of their market posi-
tioning, so that digital trade can contin-
uously align with market demands and
maintain positive growth momentum.
Digital trade mitigates some of the
disadvantages of SMEs in terms of
cost and risk resistance. In terms of
cost, the digital marketing of platforms
is characterized by strong pertinence
and widespread range, so the custom-
er acquisition cost of SMEs is reduced;
mature cross-border e-commerce
platforms offer one-stop import and
export services and other technical
support to businesses, simplifying the
restrictions of intermediate cost to
SMEs. Scenario finance also provides
flexible and efficient financial solutions
15
Technology-empowered Digital Trade in Asia Pacific
I. Ecology of digital trade in the Asia Pacific region emerges
to SMEs, which can help businesses cut
down financing cost and respond to
business changes in a more rapid man-
ner. On risk resistance, digital trade has
the attributes of multi-sided markets,
therefore purchases and sales through
cross-border e-ecommerce platforms
enable SMEs to effectively avoid the
risks of single market. SMEs also face
less risk of trade default on digital
payment platforms, and e-commerce
platforms have formulated measures
to support SMEs during the epidemic,
such as exempting the charges for
delay in warehousing and extending
order fulfillment time. As a result, the
short-term cash flow dilemma of SMEs
has been alleviated.
n the wake of the epidemic, the eco-
logical development of digital trade has
marched into the speedway, creating a
sound business environment for SMEs.
After entering the global value chain
system through cross-border e-com-
merce platforms, SMEs are expected to
find and develop more “blue oceans”.
1.4 Green and sustainable devel-
opment is a key theme of digital
trade
1.4.1 Green and sustainable de-
velopment is an important goal of
Asia Pacific economies
“Carbon neutrality” represents an im-
portant phased requirement in the
2030 Agenda for Sustainable Develop-
ment of the United Nations. Asia Pacific
economies have clear emission reduc-
tion targets: China pledges to strive
to achieve carbon neutrality by 2060,
Japan, South Korea, and New Zealand
put forward the target of becoming
carbon neutral by 2050, and Singapore
also takes carbon neutrality as the ul-
timate goal of its long-term strategies.
In the meantime, two thirds of RCEP
members submitted new Intended
Nationally Determined Contributions
(INDCs) in 2020. Additionally, due to
closer international cooperation in the
context of RCEP, some member states,
including Indonesia, Thailand and Ma-
16
Technology-empowered Digital Trade in Asia Pacific
II. Comparing the development of digital trade markets in the Asia Pacific region
II. Comparing the development of digital trade
laysia, have gained more international market in the world, as an example. At
support to achieve higher emission re- the policy level, the Chinese govern-
markets in the Asia Pacific region
duction targets. Hence, the flow of rele- ment guides enterprises to advance
vant technologies and resources within the green supply chain management of
the region has been strengthened, and express packaging through direct col-
various countries have enhanced their lection of goods from place of origin, di-
capacity to cope with the pressure of 2.1 Evaluation system for the devel- Figure: Evaluation System for the Development Indicators of Digital Trade
rect delivery with the original package,
reducing emissions. direct delivery of accumulated orders, opment of digital trade in the Asia
Pacific region
Downlin
of c ortion
recyclable applications, among other
of mobil
terminal,
speed
b oss-
e-c overa ce
sp road5%
1.4.2 Consumption of green prod- models. China also encourages enter- This chapter analyzes and compares
Do d of and
e-c order
12% rce,
5%
r
ee b
b
me ll
me
p
r
wn fix ,
ucts is increasingly booming prises to make use of cloud computing, the development levels of digital trade
Pro
k
om
e
lin ed
On the one hand, the understanding of big data, artificial intelligence and other in major Asian economies from two di-
om
k
Pr
in
green consumption among consumers technologies to strengthen supply and mensions, namely cross-border e-com- o op
us f in orti
e t o
continues to rise. According to a De- demand matching, increase stock turn- merce (60%) and digitalization (40%). po rs i erne n on
pu n t t m pti
loitte’ survey in 2021, 37% of millenni- over, promote logistics sharing among Specifically, the development level of o u of
10 latio tal ns
Co scale -
als and 40% of Gen Z believe that more multiple channels, and reduce logistics cross-border e-commerce is quantified % n, ss
cro der
people will be committed to addressing costs and energy consumption. In by five indicators: e-commerce market r ,
Dig bo erce
environmental and climate issues after China, leading e-commerce platform size, compound growth rate of e-com- ital m m
iz co 12%
40% ation
the epidemic and it is advisable to take enterprises actively attempt to build merce market size, penetration rate
Revenue Evaluation
actions such as improving recycling, green supply chains. For example, Alib- of e-commerce users, consumption from
encouraging the use of public trans- scale of cross-border e-commerce, and
system for
aba Group has made various efforts to network
port and changing eating and shopping infrastructure digital trade in
reduce emissions, such as optimizing the proportion of cross-border e-com- Cro
10% Asia ss- Pen
etra
habits. Both millennials and Gen Z also algorithms, increasing the use of clean merce in overall e-commerce. Digitali- b
e-c orde ra tion
insist on choosing a pattern of con- energy sources, and reducing carbon zation is measured by four indicators: om
m
r e-co te of
60% erce mm
sumption that matches their value, and emissions in the logistics link. In 2021, internet penetration rate, network rate, use erce
ita rs
12% ,
more than a quarter of millennials and Alibaba has proposed “green GMV” for revenue from network infrastructure, c ap of
r e n
Gen Z express that the impact (posi- the first time, and disclosed its carbon and per capita volume of transaction Pe lum ctio
vo nsa a ,
tive or negative) of businesses on the emission reductions of online orders7. on e-payment platform. i nt
tra v me
Co row of
environment will affect their purchase It is expected that more e-commerce The primary data of all indicators are y
pa %
mp th
e- 10
g e
e-c rke 015
6
decisions. enterprises will actively improve the converted to fractional values from 0 to
rat mer ze
ou
ma 21-2
om t si )
mark erce
(20 12%
nd
12% e
On the other hand, the income level greening of products in terms of pack- 100 first before comparing the scores
et siz
m
of consumers in the Asia Pacific re- aging, logistics, warehousing, and other of cross-border e-commerce and digi-
ce
E-com
gion has continuously improved in aspects in a bid to reduce the environ- talization. Finally, the combined scores
recent years. Stronger purchasing mental impact of the full life cycle of of each country will be obtained ac-
power makes them willing to pay more online shopping behaviors. cording to the weight of the two dimen-
premiums for green and environmen- sions. The countries will be grouped Data source: Data Reportal, Speedtest, Statista, Deloitte
tally-friendly products or packaging, based on their rankings. The higher a
and green shopping has also gained country's score, the better its perfor-
in popularity. Against that backdrop, mance in digital trade.
enterprises have keenly captured the
growing green consumption preference 2.2 Development of digital trade in
on the markets to offer more environ- the Asia Pacific region and market Among them, mature markets mainly
mentally-friendly products to a wider grouping include China, South Korea, Singapore
range of consumers via cross-border In light of the above-mentioned evalu- and Japan; developing markets include
e-commerce platforms. ation system, major Asian economies Thailand, Malaysia, Indonesia, Vietnam
can be mainly divided into mature and the Philippines; and early-stage
1.4.3 Green development of e-com- markets, developing markets and markets include Myanmar, Cambodia,
merce companies is constantly ap- early-stage markets in terms of their Laos and Brunei.
preciated development level of digital trade.
The e-commerce industry is actively ex-
ploring the formation of a resource-sav-
ing and environmentally-friendly devel-
opment model. Take China, the largest
17
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
II. Comparing the development of digital trade markets in the Asia Pacific region II. Comparing the development of digital trade markets in the Asia Pacific region

Figure: Overall Score among Major Asian Economies in Terms of Development of Digital Trade Mature markets
In terms of the development of cross-border e-commerce, China especially boasts outstanding advantages due to its
Mature markets Developing markets Early-stage markets huge e-commerce scale. In spite of its small overall market size, cross-border e-commerce accounts for a relatively high
proportion of Singapore's overall e-commerce, while e-commerce markets in Japan and South Korea tend to be more
71.4 mature, but the proportion of cross-border e-commerce in overall e-commerce is quite low. In the future, along with the
66.7 65.6 greater openness of e-commerce, strong purchasing power of citizens and a solid e-commerce supply chain foundation
61.1 will effectively promote the continuous growth of digital trade.
58.8 57.7
54.3 Mature markets lead in their levels of digitalization. Due to high internet penetration rates in South Korea, China, Japan
48.6 and Singapore, the advanced informationalized level has laid a solid foundation for the development of e-commerce.
46.8
Well-grounded internet infrastructure and rapid network speed have also provided unimpeded and efficient facilities
40.6 and platforms for digital trade. Furthermore, e-payment has been widely applied, and this mode of payment, as the
37.3 36.4
33.6 core part of online trade, has directly improved the security and convenience of digital trade.

Developing markets
The e-commerce industry of the five developing markets hasn’t exhibited any shortcomings in scale and growth. In
particular, the e-commerce markets of Malaysia and the Philippines are expected to register the fastest growth in
the region, and the penetration rate of cross-border e-commerce in Thailand is relatively high. In light of their limited
levels of digitalization and domestic e-commerce scale, the maturity of the five cross-border e-commerce markets
is respectable. Going forward, a sound e-commerce foundation in developing markets will unlock considerable
China South Korea Singapore Japan Thailand Malaysia Indonesia Vietnam Philippines Myanmar Cambodia Laos Brunei
consumption potential for regional digital trade under RCEP.
Data source: Deloitte
Developing markets generally have a certain foundation in digitalization, but their degree of development is limited.
Although the five countries possessed certain internet infrastructure and user base, there is still some room for
improvement in network rate. The quality improvement of internet infrastructure will raise the efficiency of information
Figure: Comparison of Three Types of Markets in Terms of Development of Cross-border E-commerce and exchanges, and unleash the vitality of e-commerce platforms. Nonetheless, an enormous gap remains between
developing markets and mature markets in the application of e-payment, which has restricted the development of
Digitalization
digital trade. In the future, the collaboration and mutual assistance at the technological level under RCEP are expected
to substantially enhance digitalization in developing markets.
100 Dot size represents national consumption scale of
cross-border e-commerce Early-stage markets
Cross-border e-commerce in early-stage markets underperforms the regional average level in the assessment. The size
90
of the four e-commerce markets is underdeveloped, but the e-commerce industry of Myanmar and Laos is expected
Developing
markets to enjoy double-digit growth in the future. Given imperfect hardware conditions for the development of cross-border
80 China e-commerce business, such as transportation and logistics conditions, there is still some way to go for early-stage
Level of cross-border e-commerce

markets to build a sound cross-border e-commerce industry.

70 Malaysia
Early-stage markets have a relatively low overall level of digitalization, and generally have no sophisticated infrastructure
Indonesia and platforms in place for the development of the digital industry (but Brunei takes the lead in internet penetration
Thailand
60 Singapore rate in Asia). In addition, their per capita e-payment transaction scale is extremely small, and their online payment
Philippines
Vietnam Japan environment is less developed.
50 Myanmar
South Korea
Laos Cambodia
40 Mature markets
Brunei
30
Early-stage Data source: Deloitte
markets Note: As China’s consumption scale of cross-
20 border e-commerce is much larger than
other countries, its dot is downsized for the
purpose of overall display effect; as the cross-
10 border e-commerce markets in Myanmar,
Cambodia, Laos and Brunei are immature,
there are no data on consumption scale of
0 cross-border e-commerce of such countries
for the moment. The dots only represent the
0 10 20 30 40 50 60 70 80 90 100 positions of such countries in the coordinate
system.
Level of digitalization

18 19
Technology-empowered Digital Trade in Asia Pacific
III. Analysis of key countries in the Asia Pacific market
III. Analysis of key countries in the Asia Pacific
market
3.1 Singapore, as an international
financial and maritime center,
connects Southeast Asia
Being a highly internationalized
financial and maritime center
renders Singapore important in
Asia and in the world. Despite its
small geographical area, Singapore still
serves as Southeast Asia's financial
center, international intermediary trade
station and aviation hub. Singapore is
not only the largest foreign exchange
market in the Asia Pacific region, but
also the third largest in the world. With
more than 200 banks, it is the fourth
largest international financial center
after New York, London and the Hong
Kong SAR. In 2020, Singapore recorded
US$58,900 in per capita GDP, ranking
sixth in the world and first in Asia. Sin-
gapore's powerful economy should not
be neglected, as it is home to the Asia
Pacific headquarters of many Fortune
Global 500 companies.
The logistics industry of Singapore has
always performed strongly. Singapore's
Figure: Annual GMV and Predication of the E-commerce Market in Singapore
from 2020 to 2025 (US$/Billion)
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
2.0
1.0
1.0
0.0
2015 2019
Data source: Ministry of Trade and Industry (MTI) of Singapore8, Statista9, Deloitte
20
logistics performance index (LPI) among
the global top ten and the country has
convenient services in highway, railway,
maritime transport, and air transport.
As an island state covering a national
territorial area of 641 square kilome-
ters, Singapore has become the largest
transshipment center in the world by
establishing a booming marine eco-
system. 20 of the world’s top 25 large
logistics companies have set up their
regional/global headquarters in Singa-
pore, and Singapore also boasts world-
class logistics infrastructure with global
connectivity, thus attracting a large
number of manufacturers and unicorn
companies to set up operation bases
there.
The Singaporean government
actively promotes global digital
trade. Singapore established rules on
digital trade and economic cooperation
on digital trade with multiple countries
with the release of the Digital Economy
Agreement (DEA) as it seeks to establish
a digital trade framework in Asia and
8.0
4.0
2020 2025
even the whole world. The digital trade
cooperation framework built on the
DEA enables Singaporean companies
to connect with their overseas partners
in digital trade more seamlessly, thus
ultimately cutting down operational
cost, increasing business processing ef-
ficiency, and making it easier for them
to get access to overseas markets. At
the same time, Singapore gives top pri-
ority to six aspects in the development
of the DEA, namely artificial intelligence,
Cross-Border Privacy Rules (CBPRs) of
APEC, data innovation, Data Protection
Trustmark (DPTM) certification, national
electronic invoicing network, and digital
transformation of SMEs, as a way to ac-
tively push forward the transformation
of domestic companies. Currently, Sin-
gapore has signed relevant digital trade
deals with many countries, including
Chile, New Zealand, Australia, South
Korea and the UK.
Singapore serves as the hub of
headquarters for cross-border
e-commerce platforms in South-
east Asia. Thanks to the forward-look-
ing planning and deployment by the
government in digital economy ecology,
Singapore has evolved into a highly
developed internet market. Blessed
with numerous advantages, Singapore
is a popular destination for the e-com-
merce industry. Lots of unicorn compa-
nies in Southeast Asia have set up their
headquarters in Singapore, including
the cross-border platforms Shopee and
Lazada, two giants in the e-commerce
industry. In addition, the integrated
e-commerce platforms headquartered
in Singapore also include: Qoo10 (a
local brand), Amazon Singapore, Ezbuy
and Carousell; the vertical e-commerce
platforms include: Zalora (fashion),
Sephora Singapore (beauty makeup),
HipVan (home decoration), Redmart
(fresh food), Shopback (group pur-
chase) and Pupsik (infant and mother).
Technology-empowered Digital Trade in Asia Pacific
III. Analysis of key countries in the Asia Pacific market
It is predicted that the e-commerce Figure: Market Size of Cross-border E-commerce in China in 2020
market size of Singapore will double
Proportion of Market Size of Cross-border Proportion of Imports and Exports of Cross-
in 2025 compared with 2020, with B2B E-commerce in China in 2020 (%) border B2B E-commerce in China in 2020 (%)
its gross merchandise volume (GMV)
amounting to US$8 billion.
3.2 China’s platform-based
development drives cross-border 27.2% 28.9%
trade
China’s developed levels of digi-
talization lays a solid foundation 71.1%
for the high-speed development 72.8%
of e-commerce trade. As the world’s
second largest digital economy just
behind the US, China has seen digital
economy turning into an important Proportion of cross-border B2B market Imports Exports
driver of economic growth. In 2020, the Proportion of cross-border B2C market
digital economy in China grew more
than three times as fast as its GDP. Forecast on Market Size of Cross-border
In the same year, the General Admin- B2B E-commerce in China (CN¥1 trillion)
istration of Customs of China issued
the Announcement on Expanding the 16
Scope of the Pilot Program of Supervi-
14 25% 13.9
sion over Business-to-Business Export
in Cross-border E-commerce, further 12 11.7
promoting the large-scale development
of B2B cross-border e-commerce, and 10 9.4
effectively filling the demand gap of
overseas markets. Meanwhile, given 8 7.4
the steady increase of investments in 24% 5.7
6
cloud platforms and the ever-acceler- 4.5
ating construction of digital platform 3.7
4 2.9
infrastructure in 2016-2021, enterpris- 2.4
1.9
es have strengthened penetration in 2
cross-border service ecosystem, and
built digital trade platforms based on 0
16 17 18 19 20 E E E E E
ecological matching of supply and de- 20 20 20 20 20 21 22 23 24 25
20 20 20 20 20
mand resources, in an effort to support
the ever-expanding cross-border B2B Source: General Administration of Customs of China, Statista, Deloitte
market.
Meanwhile, China leads the world in the found impact on the overall security surpassing all other RCEP member
development of 5G, and the high-qual- and convenience of digital trade. In states.
ity network construction builds an China, cost-effective infrastructure, • B2B e-commerce for cross-border
efficient and convenient communi- combined with favourable national pol- trade takes a dominant position
cation bridge for e-commerce users. icies and increasingly optimized trade in China. In 2020, the B2B market
Moreover, China’s e-payment system regulatory environment, have paved for cross-border e-commerce in
has seen rapid development. In 2020, the way for the development of China’s China accounted for about 72.8% of
China registered US$424.59 trillion and cross-border e-commerce trade11. the entire cross-border e-commerce
US$2,086 in the amount of e-payment Cross-border e-commerce has en- market. Specifically, cross-border im-
and per capita volume of transactions tered a mature stage with huge ports occupied 28.9% and cross-bor-
via e-payments respectively10, ranking development potential. The market der exports occupied about 71.1%,
second among RCEP member states size of cross-border e-commerce in with the US, Japan and Vietnam as
after South Korea. As the core part of China has reached US$1,542.5 billion12, its top three export markets. It is
digital trade, e-payments has a pro-
21
Technology-empowered Digital Trade in Asia Pacific
III. Analysis of key countries in the Asia Pacific market
expected that the cross-border B2B
market size of China will grow to
US$2.2 trillion with a compound an-
nual growth rate of 25%.
• North America and Europe are
the largest export destinations
for Chinese cross-border e-com-
merce. North America and Europe
together account for 62.5% of Chi-
na's cross-border exports, while
Japan and South Korea combined
account for 27.9%, and Southeast
Asia accounting for 34.1%, which
have become a new growth pole for
China’s cross-border export. Howev-
er, the proportion of China’s export
to Africa, Latin America and Middle
East is less than 20%, so there is still
much more room for growth in the
future.
3.3 South Korea strategically
turbocharges its cross-border
e-commerce
South Korea is world-leading in
terms of infrastructure digitization
and boasts excellent conditions
for e-commerce. South Korea takes a
leading position in digitalization among
RCEP member states with the highest
internet penetration rate (96.16%) in
the region. Efficient and sophisticated
digital infrastructure in South Korea
can be mainly attributed to the sup-
port of the government for digitaliza-
tion construction. The South Korean
government has taken the lead in the
transformation of digital government,
and upgrades in the construction of a
superior network has been a national
strategy. It remains devoted to a ten-
year national broadband construction
from 1995, making use of powerful
digital technologies to build e-govern-
ment platforms for the public, and
publicizing the practices to the whole
22
• Under the shadow of COVID-19,
Chinese cross-border B2C e-com-
merce defies adverse trends.
Impacted by the pandemic, the
traditional B2B market is gloomy. In
order to fill the consumption gap,
cross-border B2C e-commerce goes
against this adverse trend. As Chi-
na possesses the most complete
manufacturing industrial chains in
the world and overseas markets are
highly dependent on Chinese prod-
ucts, B2C cross-border e-commerce
unleashes tremendous develop-
ment potential. According to the
data from the General Administra-
tion of Customs of China, the import
and export volume of cross-border
e-commerce retail in China stood
at US$2.72 billion from January to
country13. At present, broadband inter-
net rates, both at the mobile terminal
and the fixed terminal in South Korea,
have touched the world’s leading level.
In the meantime, in order to continue
to maintain its leading position, South
Korea invested 9.5 billion to facilitate
the commercialization of 5G mobile
communication in 2020. The perfect
internet environment enables the de-
velopment of e-payments. According to
Statista’s projections, South Korea will
record US$143.9 billion and US$2,784
in total volume of transactions via digi-
tal payments and in per capita volume
of transactions via e-payment respec-
tively in 2021. Its total transaction value
is also expected to grow at a rate of
8.17% between 2021 and 202514. The
sophisticated infrastructure has provid-
ed excellent conditions for the devel-
opment of digital trade in South Korea.
South Korea promotes the develop-
ment of cross-border e-commerce
industry from the perspective of
February 2020, representing an in-
crease of 36.7% year on year, and
the total import and export volume
of cross-border e-commerce in Q1
2020 increased by 34.1% year on
year.
• Geographically, cross-border
e-commerce sellers in China’s
exports are mainly concentrated
in the Yangtze River Delta and
the Pearl River Delta. Guangdong
Province, Zhejiang Province and
Jiangsu Province have the most
cross-border e-commerce sellers,
each accounting for 10% of sellers
across the country. In the future, the
development potential of cross-bor-
der e-commerce in the central and
western regions will be gradually
unleashed, where the size of seller
groups will keep growing.
national strategy. In the develop-
ment of cross-border e-commerce,
the South Korean government active-
ly participates in the discussions on
e-commerce among multilateral or-
ganizations (such as OECD, APEC and
ASEM), and reinforces cooperation with
the countries where the e-commerce
industry is prosperous (such as the
US, China, the UK, Germany and Singa-
pore). The South Korean government
also launched the eAMP plan, which
aims to connect overseas businesses
and build a global business network by
using e-commerce infrastructure and
mature business models, thus making
South Korea the network center for
cross-border trade among Asian coun-
tries. Exporting electronic trading sys-
tems and electronic trading solutions
to overseas markets is one of the im-
portant outcomes in the development
of cross-border e-commerce.
Figure: Export Turnover of Cross-border E-commerce in South Korea and its Top Five Importing States
Export Turnover of Cross-border E-commerce in
South Korea from 2016 to 2020 (US$ million)
6000
5000
4000
3193
3000
2616
2031
2000
1000
0
2016 2017 2018
3.4 Japan’s strong logistics technol-
ogies underpin the cross-border
trade
Although Japan's digital economy
infrastructure is complete, the
development of its e-payment in-
dustry lags behind other countries.
Thanks to a series of strategies estab-
lished in the early stage such as the
Strategy of Constructing Nation via IT,
Japan actively promotes the construc-
tion of domestic information infrastruc-
ture and the development of the digital
economy. In 2021, the internet pen-
etration rate of Japan reached 93%15,
and the cost effectiveness of its early
infrastructure construction has reached
US$10.1 billion16, ranking just behind
China. The high cost effectiveness of
its network construction improves the
competitiveness of Japan's e-commerce
market. However, its internet quality
has gradually become backward as
the infrastructure was constructed a
long time ago, and it ranks last among
mature markets in terms of internet
speed. Meanwhile, as Japan has a se-
vere aging problem and its senior citi-
zens prefer physical capital, its e-pay-
ment industry has developed slowly. In
2021, it is expected that e-wallets as a
Technology-empowered Digital Trade in Asia Pacific
III. Analysis of key countries in the Asia Pacific market
Top Five Cross-border E-commerce Importing States
and Regions for South Korea in 2019
5321 5286
Japan
23%
2019 2020
mode of payment only make up 7% of
market share17, and that its per capita
volume of transactions via e-payment
(US$1,773) is lower than that of other
mature markets18.
Cross-border e-commerce in Japan
is still not open enough. That most
Japanese consumers are not proficient
in a second language has led to a lan-
guage barrier for cross-border e-com-
merce. The interfacing with third-party
platforms also renders consumers less
willing to make cross-border purchas-
es. As a result, the consumption scale
of cross-border e-commerce in Japan
fails to develop smoothly.
Cutting-edge logistics technologies
in Japan provide strong support
for cross-border electronic trade.
In addition to advanced information
technology and other infrastructure in
the early stages, Japan also relies on its
effective management of cross-border
logistics, and its efficient logistics infor-
mation systems provide strong support
for digital trade inside and outside
of Japan. Logistics costs in Japan only
occupied 5.38% of its sales volume in
202019.
Japan is committed to building a
HK
UK
5%
6%
US
43%
China
23%
Source: Statista, Deloitte
zero-carbon society to promote the
green development of its econo-
my. Recently, the Ministry of Economy,
Trade and Industry of Japan released
the Green Growth Strategy, setting
a target to achieve carbon neutrality
by 2050 and building a zero-carbon
society20. Japan adheres to the devel-
opment of green industries to drive the
continuous progress of the economy.
As a mature market, Japan encourag-
es the development of offshore wind
power, hydrogen fuel, hydrogen en-
ergy and other efficient clean energy
industries, as well as the utilization of
carbon recovery and other technolo-
gies to reduce carbon emissions. At
present, Japan has great ascendancy in
advancing green digital trade as its car-
bon dioxide emissions per unit of GDP
are only 0.18kg, much lower than that
of other RCEP member states. Mean-
while, Japan formulates and responds
to environmental protection standards
in trade based on strict principles, and
takes part in the signing of multiple
environmental protection agreements
such as on ozone layer protection so
as to actively boost the green economy
in regional trade.
23
Technology-empowered Digital Trade in Asia Pacific
III. Analysis of key countries in the Asia Pacific market
3.5 Malaysia’s continuous
digitalization penetration drives
growth in cross-border trade
The e-commerce market in Malay-
sia witnesses the fastest growth
but the scale of cross-border
consumption requires further im-
provement. The e-commerce market
in Malaysia has developed rapidly over
recent years. In 2021, the total size of
the e-commerce market in Malaysia
achieved 61.4% of the e-commerce
market size in China, totalling US$6.297
billion and ranking third among devel-
oping markets only after Indonesia and
Thailand. The compound growth rate of
its e-commerce market size is expected
to reach up to 14.84% between 2021
and 202521, ranking first among RCEP
member states. This indicates that the
e-commerce market in Malaysia has
remarkable development prospects.
However, the current penetration rate
of online e-commerce is relatively low
in Malaysia, reaching 44% in 2021 22,
and the increase in penetration rate
has stabilized at around 4% in recent
years. Along with improvements to in-
ternet infrastructure and the increase
in penetration rate of network users,
e-commerce users are expected to
increase accordingly. Nevertheless, un-
der the impact of many factors, includ-
ing cross-border logistics infrastructure
and technical operations, Malaysia's
cross-border consumption scale is not
optimistic, only reaching US$3.52 bil-
lion23. This only accounts for 42% of the
market size of the internet economy in
Malaysia24, which is much lower than
that of mature markets among RCEP
members.
The concept of green development
promotes sustainable develop-
ment. The Malaysian government
actively advances ESG concepts,
supports green and sustainable
development, and advocates the
utilization of efficient energy to
stimulate the development of
renewable energy. In addition, the
government has issued multiple
bills including the National Energy
24
Technology-empowered Digital Trade in Asia Pacific
III. Analysis of key countries in the Asia Pacific market
Figure: Market Size and Growth Rate of Cross-border E-commerce in Japan na Convention on Protection of Ozone Layer) only reached 71.4% of China's standards, so the formulation of environmental pro-
tection standards in the country remains to be improved.
Prediction of the Market Size of Distribution of Cross-border
Cross-border E-commerce in Japan E-commerce in Japan in 2019 (US$
(US$ million) million)
Figure: Average Concentration of PM2.5 in a Cubic Meter of Air (μg)
60.00
6000 5748.7 10.3% 52.66
+7.5%
50.00
5000
4000 35.85%
40.00
3000 35.56
2595
53.85% 29.63
2000 30.00
26.26 25.61
25.11 25.04
1000
20.00 19.08 18.07
16.50
0 16.04
2020 2030 B2B B2C C2C
11.70
10.00
Market Size and Growth Rate of Cross-border E-commerce 5.90
Distribution in Japan from 2020 to 2030 (US$ million)
7.1% 0.00
China Myanmar Vietnam Thailand Cambodia Laos South Korea Singapore Philippines Indonesia Malaysia Japan Brunei
Source: The World Bank, Deloitte
7.8% 2969.20
3000.00
3.6 Indonesia’s demographic div- nesia’s economy. shopping experiences and promo-
2500.00 idend keeps unleashing market • Social e-commerce is thriving and tional campaigns. According to a sur-
2124.14 potential consumers are fond of trading on vey of iPrice, the average transaction
2000.00 The scale of e-commerce in Indo- social media. The social media land- value of Indonesian online shoppers
8.5% nesia is huge with tremendous po- scape in Indonesia is flourishing, and is US$36, much lower than that of
1500.00 1397.41
tential in cross-border e-commerce. some enterprises have attained great Malaysia (US$54) and Singapore
930.31 The total size of Indonesia's e-com- success on Facebook and Instagram. (US$91).
1000.00
655.35 merce market reached US$43.351 Indonesian consumers are accus- • Logistics represents the most daunt-
500.00 billion in 2021 compared with the tomed to dealing with sellers directly ing challenge faced by Indonesian
267.29
e-commerce market size in China, though social media or messaging cross-border e-commerce. Indonesia
0.00 ranking just behind South Korea as the apps (such as LINE and WhatsApp). is home to 17,000 islands covering
B2B B2C C2C third largest in RCEP. The compound They are generally indifferent to an area larger than the EU, and
growth rate of e-commerce market size trading platforms, and so they prefer logistics costs account for about a
2020 2030
is expected to register 10.2% between to search for goods on social media, quarter of Indonesia’s GDP. Howev-
Source: Grandview Research, Deloitte 2021 and 2025, so the e-commerce which is more user-friendly and reli- er, e-commerce retailers are trying to
market in Indonesia is considered to able. surmount the difficulties faster than
Efficiency Action Plan to provide a economy. In this way, it is urgent for have tremendous potential. Meanwhile, • Indonesian consumers like buying in- expected amid increasing adoption
comprehensive legal framework Malaysia to drive the development of the proportion of cross-border e-com- expensive products and the average of smartphones.
for energy demand and develop- digital trade and promote industrial merce consumption scale in Indonesia transaction value is low. Indonesian • Users prefer e-commerce platforms
ment25. As a result, Malaysia's transformation and upgrading. Addi- is at a relatively high level among de- consumers prefer to buy promotion- in local language. Language expe-
environmental quality is excellent tionally, Malaysia has lower require- veloping markets. The consumption al and low-priced products. After the rience will greatly affect consumer
with the average concentration of ments for environmental protection scale of cross-border e-commerce in end of a seller’s promotion campaign, shopping experience, and the In-
PM2.5 in the air being only 16.04μg/ standards in trade compared with Chi- Indonesia stands at US$17.34 billion, consumers would proactively search donesian consumers on the whole
m3. na. According to Deloitte’s statistics, the ranking just behind China—the mature for discounts from other sellers. In network express that they would
However, carbon dioxide emissions per environmental protection standards for market—among RCEP member states. order to enhance consumer loyalty, rather see local languages or native
unit of GDP are still at a high level (0.63 trade in Malaysia (including the signing Cross-border e-commerce is expected sellers are required to set competi- languages on the interface of e-com-
kg per unit of GDP), where traditional of the International Tropical Timber to become an important part of Indo- tive prices while delivering excellent merce shopping platforms.
industry forms the pillar of Malaysia's Agreement and the signing of the Vien-
25
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
III. Analysis of key countries in the Asia Pacific market III. Analysis of key countries in the Asia Pacific market

Figure: Statistical Overview of the Number of Internet Users in Ten ASEAN Member States Figure: Per Capita Volume of Transactions via E-payment (US$)
from 2020 to January 2021 (millions)
3000
250.0 2784
95.0% 100.0%
90.0% 2500
84.2% 90.0%
202.6
200.0 80.0% 2086
73.7% 2000 1952
70.3% 1773
70.0%
69.5% 1500
150.0 67.0% 60.0%

50.0% 1000
52.6%
48.4%
100.0 43.3% 40.0%
73.9 500 396 284
68.7 30.0% 229 211 160 156 139 81 24
48.6
50.0 20.0% 0 Source: Statista, Deloitte
27.4 i
23.7 ea na re an ne nd

es
r i

m
sia

sia

os
po

ar
Ko p u

a
Ch Ja Br la

pin
10.0% ai

di

na

nm
ga

La
ay

ne
8.9 5.3 0.4 h

bo
t Th

et
n

al

ilip
3.6 ou Si

do

ya
m
M

Vi
S

M
Ph
In

Ca
0.0 0.0%
Indonesia Philippines Vietnam Thailand Malaysia Myanmar Cambodia Singapore Laos Brunei

Number of internet users in January 2021(millions) Number of internet users in January 2020(millions)

Internet penetration rate in January 2021(%) Year-on-year growth rate of internet users (%)

Source: Datareportal, Deloitte

3.7 E-payment rate in the
Philippines constrains online trade
E-commerce in the Philippines has
huge growth potential, but the
e-payment industry is poorly de-
veloped. The Philippines is a country
of thousands of islands, therefore its
unfavorable geographical conditions
makes it extremely difficult to build the
internet, which further leads to sluggish
development of internet construction
in the country. Network users only ac-
count for 67% of its total population.
The complicated geographical pattern
has a significant negative impact on the
network penetration rate and network
speed in the Philippines.
The e-commerce market in the Philip-
pines is in an initial stage of rapid devel-
opment. Although the current e-com-
merce market size only amounts to
US$5.089 billion, its compound growth
rate is expected to reach up to 14.64%
between 2021 and 2025, ranking just
behind Malaysia among RCEP mem-
bers. The e-commerce market in the
Philippines has enormous potential, so
the country has become a hot spot for
quite a few international investments26.
However, impacted by the internet,
e-wallet and other digital technologies,
the penetration rate of e-commerce
users is not high, only accounting for
39% of the total population.
Despite the fact that digital payments
present an uptrend due to the pan-
demic and relevant national policies,
the penetration rate of e-payments
is not high in the Philippines on the
whole. The per capita volume of trans-
actions via e-payment in 2021 is only
US$13927. Generally speaking, Filipinos
rarely use bank accounts, they are ac-
customed to using cash in transactions
and they are worried about the security
of e-payments, thereby leading to slow
development of e-payment industry.
At the same time, sluggish progress in
digital infrastructure and other areas
further impedes the e-commerce de-
velopment of the Philippines.

26 27
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific
IV. Ten findings of the cross-border e-commerce dynamics in the Asia Pacific region

IV. Ten findings of the cross-border e-com-

take more than half of all business. Beauty makeup products are favored in South Korea, and beauty makeup sales account for
19.3% in the cross-border market. In addition, clothing and accessories products also occupy large market shares in cross-border

merce dynamics in the Asia Pacific region

e-commerce in the Asia Pacific region. These kinds of products dominate nearly 50% of market shares in Indonesia.

In July 2021, Deloitte conducted a survey on cross-border e-commerce enterprises in multiple Asia Pacific nations, including China,
Figure: Top Three Cross-border Sales Fields of Various Countries
Singapore, South Korea, Japan, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, collecting 600 questionnaires and
summarizing ten findings around the dynamics of cross-border e-commerce in the Asia Pacific region.
China Singapore South Korea Japan
Figure: Portrait of Enterprises
4.1 Small businesses account for
more than 85% of cross-border Enterprise Scale • Furniture and • Sports and out- • Beauty makeups • Others
e-commerce home supplies doors • P et t y c o mmo d - • Computers and
The cross-border e-commerce market 4% 2% 3%
5% • Sports and out-
doors
• Computers and
communication
ities and handi-
crafts
communication
and consumer
in the Asia Pacific region is mainly
composed of small businesses with
7% 7% • Computers and and consumer • Others electronics
fewer than 100 employees (over 85%). communication electronics • Petty c ommod -
In developing markets, large businesses and consumer • Clothing and ac- ities and handi-
only account for 5% of market size, electronics cessories crafts
slightly greater than the proportion of
Mature Developing
large businesses in mature markets
(2%). The enterprises with income
markets markets Indonesia Malaysia Philippines Thailand Vietnam
less than US$1 million account for
62.5% in developing markets, about 10 • Clothing and ac- • Computers and • Computers and • Computers and • Clothing and ac-
percentage points higher than that of cessories communication communication communication cessories
mature markets (52%). 87% 85% • Computers and and consumer and consumer and consumer • Medical care and
communication electronics electronics electronics public health
4.2 “Cross-border home-bound and consumer • Clothing and ac- • Clothing and ac- • Others • Petty c ommod -
economy” comes into prominence Small businesses with fewer than 100 employees SMEs with 100-500 employees electronics cessories cessories • Medical care and ities and handi-
with 3C electronic products Medium-sized businesses with 500-2,000 employees Large businesses with more than
• Auto parts • Furniture and • Furniture and public health crafts
emerging as an export mainstay 2,000 employees home supplies home supplies
“Cross-border home-bound Composition of income
economy” comes into prominence
52% 21% 12% 15%
with 3C electronic products Mature
emerging as an export mainstay. markets 4.3 Mature markets favor Europe number of businesses are eager to are mainly concentrated in Southeast
As the pandemic impedes normal life and America, while developing build brands and engage customers Asia. As a platform catering to the
62.5% 16.62% 9.18% 11.74%
and social contact, the demand for Developing markets focus on Southeast Asia directly by virtue of mature market Southeast Asian market, Lazada serves
online equipment has been surging, markets North America and Europe are the operations, self-built platforms are as an important choice for enterprises
resulting in increased cross-border Less than one One million to five Five million to ten
largest import and export destinations the perfect way to learn about users’ to make overseas transactions and
Greater than ten
trade of 3C electronic products. From million million million million for cross-border e-commerce in mature psychology and feedback and thus is deeply favored by Southeast Asian
the perspective of sales of cross- markets in the Asia Pacific region, guide product R&D and operations. customers.
Business Models with Amazon and eBay being more The e-commerce import and export
border e-commerce enterprises in the
Asia Pacific region, 3C products still popular. Furthermore, as an increasing destinations of developing markets
53.6%
rank among top three on the sales
list of most countries. Specifically,
15.9% B2C
the proportion of cross-border 30.5% Mature markets B2B
e-commerce in the 3C industry reached
52.6% in the Philippines. B2C&B2B
28.9%
From the perspective of China’s sales
data, 3C products no longer have 22.6%
a significant edge and businesses
48.4% Developing markets
dealings in furniture and home supplies
Note: Mature markets: China, Singapore, South Korea, Japan
Developing markets: Indonesia, Malaysia, the Philippines, Thailand, Vietnam

28 29
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific

Figure: Third-party Platforms Most Favored by Mature Markets For mature cross-border e-commerce markets, Europe, America and Southeast Asia are the sales regions with rapid growth, while
developing cross-border e-commerce markets mainly expand sales in the Asian market. The Southeast Asian market ranks among
top three among all sales markets in Asia Pacific countries. Specifically, over 80% of cross-border e-commerce businesses in
100.00%
Indonesia, Malaysia, the Philippines and Vietnam believe that the Southeast Asian market has the fastest growth.

Figure: Three Fastest-growing Markets

China Singapore South Korea Japan

75.00%
North America Southeast Asia Southeast Asia North America
64% China
Japan and South
Europe China Southeast Asia
Singapore Korea
50.00%
South Korea Southeast Asia North America North America Europe

Japan

31%
Indonesia Malaysia Philippines Thailand Vietnam
25.00%
18% 18%
Southeast Asia Southeast Asia Southeast Asia Southeast Asia Southeast Asia
14% 13%
6%
6% Europe China Central Asia China China

0.00%
Japan and South Japan and South
Amazon eBay Self-built Lazada AliExpress Local platform Other Wish China Central Asia Europe
from an overseas Korea Korea
platform country

The main defects of third-party platforms lie in various expenses and fierce competition. Cross-border e-commerce in
Figure: Third-party Platforms Most Favored by Developing Markets
the Asia Pacific region mainly faces various expenses and fierce competition from third-party platforms. When a product or brand
has less prominent advantages, it will be easily obscured by a great deal of product information or has to pay costly booth fees.
100%
Due to a lack of information sharing, the platforms will not share consumers’ data with sellers, so it is hard for sellers to improve
repurchase rate. More than 25% of cross-border e-commerce enterprises express that sellers can barely enhance the depth of
services due to the lack of independent and innovative marketing.

75%

Indonesia

Malaysia

50% Philippines

Thailand

Vietnam

25% Average

0%
Lazada AliExpress Local platform eBay Amazon Other Self-built Wish
from an overseas
country platform

30 31
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific

Figure: Defects of Third-party Platforms deployment. According to the survey es have launched or intend to launch
results, among cross-border e-com- independent websites, which is evi-
merce sellers in mature markets, 75% dently higher than the proportion (69%)
China 47.10% 77.90% 29.40% 32.40% 22.10% of cross-border e-commerce enterpris- in developing markets.

Figure: Intention to Set up Independent Websites in Mature Markets

Singapore 59.30% 37% 37% 29.60% 25.90%
Survey on Intentions to Set up Independent Websites

South Korea 40.40% 59.60% 19.30% 14% 22.80% 100%

19%
29% 37% 31%
75% Proportion of
Japan 58.30% 55.60% 2.80% 16.70% 8.30% Enterprises that Have
37% 53% Launched or Intend to
50% 33% Launch Independent
47%
Indonesia 63.20% 31.60% 10.50% 15.80% 15.80% Websites in Mature
25% Markets
26% 36%
24% 28%
Malaysia 58.60% 44.40% 37.40% 47.50% 37.40%
0%
China Singapore South Korea Japan
Philippines 57.90% 42.10% 21.10% 15.80% 15.80% Have set up Haven’t set up but have intentions Haven’t set up and have 75%
independent websites to set up independent websites no intention to set up
independent websites
Thailand 48.30% 43.30% 31.70% 25% 21.70%
Figure: Intention to Set up Independent Websites in Developing Markets
Survey on Intentions to Set up Independent Websites
Vietnam 58% 50% 38.20% 38.20% 35.30%
100%
21% 27%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 33% 32% 35% Proportion of
75%
Enterprises that Have
Various expenses Fierce competition Overlay and coverage of Lack of indenpendent and Lack of information sharing
42% 32% Launched or Intend to
information innovation marketing
50% 32% Launch Independent
41% 30%
Websites in Developing
In that case, independent websites present noticeable advantages. Markets
25%
37% 36% 41%
35%
• Shaping corporate brands and pinpointing customer traffic: sellers can continuously enhance brand strength 26%
through independent websites, and harvest new resources while maintaining regular customers with a view to 0%
Indonesia Malaysia Philippines Thailand Vietnam
repeat marketing and cross-selling in the future.
Have set up Haven’t set up but have intentions Haven’t set up and have
69%
independent websites to set up independent websites no intention to set up
• Achieving data security and value increase: sellers can have 100% of data in their hands, control the security of independent websites
data, and conduct the secondary development of data so as to constantly dig out the value of such data.

4.5 Payment and sales are the most in Singapore is much higher than the in trading, and Indonesia performs no-
• Avoiding the restrictions of rules and reducing cost: self-operated independent websites provide high autonomy digitalized links average value. The digitalization degree ticeably well with the penetration rate
and flexibility, and have cost advantages with lower transaction commissions or annual fees than third-party Payment and sales are the two of production and transaction is rela- reaching 52.5%. The penetration rate
platforms. major links with the highest pen- tively high in developing markets. of sales digitization in Malaysia is the
etration rate of digitalization. The The least digitized part in all links lies highest, standing at 65.7%. The pene-
penetration rate of payment digitali- in production. The digitalization of pro- tration rate of payment digitalization
4.4 70% of enterprises hope to increasing export sellers. Compared sites, which are already in place among zation is 55%, and 53% for sales digi- duction in developing markets is slightly and logistics digitalization in Singapore
establish independent websites with third-party platforms, cross-border 33.4% of the surveyed enterprises. talization. Mature markets vigorously higher than that in mature markets with are the highest, standing at 85.2% and
Independent websites have become e-commerce with independent website Mature markets are more likely adopt digital technologies in terms of Vietnam and the Philippines perform- 63%, respectively.
a key channel for enterprises to break has the advantages of precision and to set up independent websites. payments, sales and logistics, among ing very well. Cross-border e-commerce
the business ceiling or expand into new flexibility. 70% of the surveyed enter- Cross-border e-commerce has entered which the digitalization rate of all links in developing markets performs better
markets, as it attracts the attention of prises plan to set up independent web- the stage of three-dimensional channel

32 33
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific

Figure: Degree of Digitalization Across all Links of Cross-border E-commerce Instant receipt of funds makes and security guarantees. In the mean- technologies. In addition, considering
cross-border collection more effi- time, seamless connection to various that receipt speed of funds used to be
cient. The survey results show that the global commercial platforms is one of a significant inconvenience for many
Production Trading Sales Payments Logistics vast majority of enterprises hold that the main advantages of online payment sellers in the past, payment institutions
the rapid and efficient fund reconcili- platforms. In terms of payment rate, take pertinent measures to provide the
ation process of third-party platforms currently the average rate of cross-bor- services about instant receipt of funds
improves the timeliness of cash flow. der payment markets has declined for sellers.
Cash flow is vital to small multinational to 0.6%-0.7% from 1%, and payment Generally speaking, payment institu-
enterprises. Instant receipt of funds institutions are trying to grant more tions can address the pain points of
20% 42% 53% 55% 38% has reduced the receipt time of funds concessions to sellers. cross-border sellers by improving pay-
from the previous “T+7” to the current In the aspect of security, quite a few ment systems, raising the timeliness of
“seconds”, thus promoting industrial payment institutions provide sellers capital flows, realizing seamless con-
development. with a more comprehensive and guar- nections to various global e-commerce
Most cross-border e-commerce com- anteed payment experience by obtain- platforms, and providing security guar-
4.6 Instant receipt of funds makes Korea; Paypal has more advantages in subsidiary in 2019, WorldFirst has panies pay attention to lower expenses ing licenses and adopting advanced antees.
cross-border collection more developing markets where Southeast continued to cooperate with qualified
efficient Asia predominates. domestic institutions to provide faster, Figure: Most Popular E-payment Platforms
In the aspect of e-payment platforms, Founded in London in 2004, WorldFirst more convenient and affordable cross-
Rapid and efficient fund
WorldFirst has been widely applied in is engaged in providing high-quality border collection services for cross-
mature markets, occupying a share of payment services for global SMEs. Since border e-commerce sellers and SMEs.
reconcilication process improves the
timeslines of cash flow
58.4%
Rapid and
above 40% in China, Japan and South it joined Ant Group as a wholly-owned efficient fund
reconciliation
Lower expense 32.4% processes Lower expenses
Figure: Most Popular E-payment Platforms improve the
E-payment Platforms Seamless connection to various timeliness of
cash flow
global e-commerce platforms 30.3%
China Singapore South Korea Japan
Security guarantee:support and Security
4% 4%4% 2%
4% 16% provide technocal guarantee with 29.9% Seamless
guarantee:
22% 24% 28% qualified licenses support and
7% 28% connection to
provision
One -stop purchase and more various global
of technical
convenient ordering and paymment 20.7% e-commerce
guarantees
2% processes platforms
26% 3% with qualified
16% licenses
Provide other facilitating services,
43% 55% 56% 41% such as "green channel" for setting 15.4%
12% 3% up shops globally

Indonesia Malaysia Philippines Thailand Vietnam Figure: Biggest Challenges to Cross-border E-commerce
4.7 High logistics costs are the
7% biggest challenge to cross-border
21% 14% 11% 3% 12%
5% e-commerce High logistics costs 67.57%
5% 6%
4% The stubbornly-high logistics costs in
3%
10% 3% the cross-border e-commerce industry
Difficulty in customs clearance 46.02%
5% 22%
19% is the largest challenge for cross-border
5% 9% Low awareness of brands 31.91%
e-commerce enterprises. The second
1% 11% hardest challenge is the difficulty in High platform expenses 31.86%
69% 62% 74% 5% 58% 56% customs clearance inspections, and
the third hardest challenge lies in low Difficulty in marketing 31.09%
Paypal WorldFirst Alipay App Airwallex Payoneer LianLian Global PingPong Other awareness of brands, high platform
fees and marketing problems. Nearly Difficulty in export rebates 27.84%
a third of enterprises are facing these
three types of challenges. Lack of professionals 22.11%
Rapidly changing policies 19.13%

Lack of platform influence 18.37%

34 35
Technology-empowered Digital Trade in Asia Pacific Technology-empowered Digital Trade in Asia Pacific

Although high logistics costs are almost the biggest challenge in cross-border e-commerce in the Asia Pacific region, 61.8% of the
surveyed enterprises in Vietnam believe that the largest challenge is the difficulty in customs clearance inspections.

Table: Breakdown of Challenges to the Cross-border E-commerce of Various Countries 4.10 Green development is turning from an objective into action
A majority of companies in the Asia Pacific attach great importance to green development goals. Among them, more than 60%
China Singapore South Korea Japan Indonesia Malaysia Philippines Thailand Vietnam of businesses in Vietnam focus on green development goals, taking the highest proportion. Businesses in Singapore have the
High logistics strongest green action power, as this country leads other countries in the proportion of enterprises taking action for green
costs
72.10% 74.10% 57.90% 75% 63.20% 77.80% 78.90% 65% 44.10% development goals, achieving 29.6%.
Difficulty in customs Figure: Proportion of Businesses Focusing on Green Development Goals in Various Countries
clearance inspection 27.90% 37% 38.60% 55.60% 57.90% 58.60% 36.80% 40% 61.80%
Low awareness of 70.0%
brands 32.40% 37% 38.60% 11.10% 21.10% 33.30% 31.60% 35% 47.10%
High platform
21.10% 42.40% 32.40% 60.0%
expenses
44.10% 37% 24.60% 38.90% 21.20% 25%

Difficulty in marketing 44.10% 25.90% 47.40% 22.20% 26.30% 29.30% 10.50% 30% 44.10% 50.0%
35.3%
31.7%
Note: The red figures represent the largest challenge encountered by a country 40.0%
43.9% 37.4% 21.1% 14.8%
36.8%
4.8 “Genuine goods guarantee” is challenge, and even more enterprises the quality control over the goods 38.9%
30.0%
vital to the sustainable develop- in developing markets and Singapore with high timeliness. Cross-border
ment of supply chains in cross-bor- hold this view. The proportion of the logistics also faces tariff differ- 27.9%
20.0%
der e-commerce surveyed enterprises holding that view ences and diverse complicated
Cross-border e-commerce is mainly in Singapore even reaches 74.1%. customs clearance formalities and
confronted with four challenges in the It is difficult for brands to contact procedures 10.0%
sustainable development of supply downstream channels and they 31% of enterprises are facing these two
chains: face high information collection challenges, and developing markets 0.0%
“Genuine goods guarantee” is a cost and trust cost are facing more severe challenges than Vietnam South Korea Malaysia Thailand Japan Philippines Indonesia Singapore China
crucial consideration factor for 37.5% of enterprises are facing this mature ones.
consumers when buying goods, but challenge. Among them, 47.4% of en- Additionally, 25% of cross-border Focus on green development goals but haven't taken any action
cross-border trade makes brand terprises in the Philippines and 16.7% e-commerce enterprises also note that Focus on green development goals and taken action
certification challenging of enterprises in Japan are wrestling “he overseas warehouses are faced
Almost half of cross-border e-com- with this issue. with high cost in the case of using self-
merce enterprises believe that genu- Cross-border logistics has long de- built warehousing logistics.
ine goods guarantee is an enormous livery times, posing challenges to

Figure: Main Expectations after RCEP Takes Effect

4.9 Simplification of customs
clearance processes and
simplify customs clearance
tariff reductions are the main 51.4%
procedures
expectations after RCEP takes
effect Exempt cross-border

Most Asia Pacific countries expect that

e-commerce from tariffs or 48.6%
lower non-tariff barriers
RCEP gives top priority to simplifying Set up supervision
customs clearance processes, reducing platforms,formulate supervision
tariffs and strengthening supervision, policies and exercise 47.3%
while nearly 50% of businesses in the Integrate regional market resources
Philippines and Vietnam expect that such as commodities technologies
RCEP can contribute to the integration talent exchanges etc and raise 27.4%
resource utilization rate
of regional market resources.
Harmonize e-commerce sales standards
in various areas and strengthen the
implementation of policies and standards as
26.5%
well as mutual trust of enterprise
Provide institutional guarantee for the
regional e-commerce cooperation and
26.4%
create sound institutional environment
36 37
Contacts

Lam, Taylor Lian, Mark

Vice Chairman Partner, Technology
Partner, TMT Deloitte China
Deloitte China Tel: +86 755 33538668
Tel: +86 10 85207126 Email: mlian@deloitte.com.cn
Email: talam@deloitte.com.cn
Chen, Lydia Lan
Wu, Gary Partner, Deloitte Research
GLCSP of Alibaba Deloitte China
Deloitte China Tel: +86 21 61412778
Tel: +86 10 85207762 Email: lydchen@deloitte.com.cn
Email: gawu@deloitte.com.cn
Zhou, Lisa Li Yan
Chung, Roger Yun Tai Senior Manager, TMT
Director, TMT Deloitte China
Deloitte China Tel: + 86 10 8512 5909
Tel: + 86 21 23166657 Email: liyzhou@deloitte.com.cn
Email: rochung@deloitte.com.cn
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